With common-sense exceptions for seniors, veterans, and our troops, we will roll back government spending to pre-stimulus, pre-bailout levels, saving us at least $100 billion in the first year alone and putting us on a path to balance the budget and pay down the debt. We will also establish strict budget caps to limit federal spending from this point forward. We will launch a sustained effort to stem the relentless growth in government that has occurred over the past decade. By cutting Congress’ budget, imposing a net hiring freeze on non-security federal employees, and reviewing every current government program to eliminate wasteful and duplicative programs, we can curb Washington’s irresponsible spending habits and reduce the size of government, while still fulfilling our necessary obligations.

We will also prevent Washington from forcing responsible taxpayers to subsidize irresponsible behavior by ending bailouts permanently, canceling the Troubled Asset Relief Program (TARP), and reforming Fannie Mae and Freddie Mac.

That is not actually a plan, of course. It is a plan to make a plan.

First, Democrats put into their own Dodd-Frank law an amendment precisely “prohibit[ing] taxpayers from ever having to bail out the financial sector.” There are no bailouts.

Second, ending TARP is not a serious policy idea, either. The program sunsets on October 3 — about 10 days from now. And it ended up costing less than a tenth of its initial budget.

Third, there are no cuts in this proposal. There are caps on federal hiring, for instance, but nothing that would represent more than tens of billions of dollars in savings — though the United States is trillions of dollars in debt. Republicans say there are duplicative programs that should be eliminated, but do not name one.

Later, the Republicans do elaborate on these ideas, somewhat:

• Act Immediately to Reduce Spending: There is no reason to wait to reduce wasteful and unnecessary spending. Congress should move immediately to cancel unspent “stimulus” funds, and block any attempts to extend the timeline for spending “stimulus” funds. Throwing more money at a stimulus plan that is not working only wastes taxpayer money and puts us further in debt.
• Cut Government Spending to Pre-Stimulus, Pre-Bailout Levels: With common-sense exceptions for seniors, veterans, and our troops, we will roll back government spending to pre-stimulus, pre-bailout levels, saving us at least $100 billion in the first year alone and putting us on a path to begin paying down the debt, balancing the budget, and ending the spending spree in Washington that threatens our children’s future.
• Establish a Hard Cap on New Discretionary Spending: We must put common-sense limits on the growth of government and stop the endless increases. Only in Washington is there an expectation that whatever your budget was last year, it will be more this year and even more the next. We will set strict budget caps to limit federal spending on an annual basis. Budget caps were used in the 1990s, when a Republican Congress was able to bring the budget into balance and eventual surplus. By cutting discretionary spending from current levels and imposing a hard cap on future growth, we will save taxpayers hundreds of billions of dollars.
• Cut Congress’ Budget: This year, Congress increased its own budget by 5.8 percent at a time when families and small businesses across the country are cutting back. We will make Congress do more with less by significantly reducing its budget.
• Hold Weekly Votes on Spending Cuts: Earlier this year, House Republicans launched the YouCut initiative to combat the permissive culture of runaway spending in Congress. Over the course of nine weeks, YouCut produced proposals to save taxpayers more than $120 billion. We will continue to hold weekly votes on spending cuts.
• End TARP Once And For All: Americans are rightly outraged at the bailouts of businesses and entities that force responsible taxpayers to subsidize irresponsible behavior. We will cancel the Troubled Asset Relief Program (TARP), a move that would save taxpayers roughly $16 billion.
• End Government Control of Fannie Mae and Freddie Mac: Since taking over Fannie Mae and Freddie Mac, the mortgage companies that triggered the financial meltdown by giving too many high risk loans to people who couldn’t afford them, taxpayers were billed more than $145 billion to save the two companies. We will reform Fannie Mae and Freddie Mac by ending their government takeover, shrinking their portfolios, and establishing minimum capital standards. This will save taxpayers as much as $30 billion.
• Impose a Net Federal Hiring Freeze of Non-Security Employees: Small businesses and entrepreneurs are the engine of our economy and should not be crowded out by unchecked government growth. We will impose a net hiring freeze on non-security federal employees and ensure that the public sector no longer grows at the expense of the private sector.
• Root Out Government Waste and Duplication: Once created, federal programs almost never go away, even if the problem they were created to address is no longer relevant. More than 20 states have addressed this problem by requiring that programs end – or “sunset” – by a date certain. We will adopt this requirement at the federal level to force Congress to determine if a program is worthy of continued taxpayer support. necessary to protect our entitlement programs for today’s seniors and future generations.
• Reform the Budget Process to Focus on Long-Term Challenges: We will make the decisions that are requiring a full accounting of Social Security, Medicare, and Medicaid, setting benchmarks for these programs and reviewing them regularly, and preventing the expansion of unfunded liabilities.

But, again, there are no actual suggestions for cuts here. It is all well and good to say you’ll cut the federal budget. It is quite another to start taking away seniors’ Social Security, or families’ school-lunch funding, or farmers’ subsidies, or workers’ unemployment insurance, or bridge-builders’ contracts.

For one, their scale of involvement in the housing market is massive. “Fannie Mae and Freddie Mac took over a foreclosed home roughly every 90 seconds during the first three months of the year,” the piece notes. “They owned 163,828 houses at the end of March, a virtual city with more houses than Seattle.” Most of their activity, naturally, is concentrated in the sand states (Nevada, Arizona, Florida, California) and Michigan, where most foreclosures take place. “The two companies together accounted for 17 percent of real estate sales in Arizona during the first four months of the year,” Appelbaum reports.

And bailing out Fannie and Freddie might end up costing the federal government more than bailing out the financial sector: “So far the tab stands at $145.9 billion, and it grows with every foreclosure of a three-bedroom home with a two-car garage one hour from Phoenix. The Congressional Budget Office predicts that the final bill could reach $389 billion.”

The piece also notes that Fannie and Freddie do not just eat the costs of foreclosed homes. They pay to take care of them:

Selling a house generally costs the government about $10,000. The outsides are weeded and the insides are scrubbed. Stolen appliances are replaced, brackish pools are refilled. And until the properties are sold, they must be maintained. Fannie asks contractors to mow lawns twice a month during the summer, and pays them $80 each time. That’s a monthly grass bill of more than $10 million. All told, the companies spent more than $1 billion on upkeep last year.

CNBC: You still believe it was the right thing to pay counterparties 100 cents for the dollar?

Geithner: Oh, absolutely. Again, the way–this is a tragic failure in the system, and we had no effective legal means to step in and prevent default without doing what you said, helping this firm meet all its legal obligations. That’s why at a centerpiece of the president’s reform proposals is to give the government the tools to unwind, dismember, break up, sell these institutions without the taxpayer being put in the position of having to absorb their losses. That’s the basic–one of the most important reasons why we have to get reform in place.

We had no choice at the time other than to do this. And I’m, personally, very confident it was the right thing to do, and we did it in the best way possible for the American people.

Geithner will testify Jan. 27 before a House oversight panel on his role in those decisions.

Yesterday, we learned just how entrenched Geithner, head of the New York Federal Reserve before taking the Treasury spot, was with AIG. Even after the federal government had rushed in with $180 billion to bail out the beleaguered insurance colossus, the New York Fed was telling AIG executives to keep mum about tens of billions of dollars in payments it was making to other Wall Street giants, according to emails obtained by Bloomberg News Thursday. And although the official line from Treasury this week is that Geithner “played no role” in that episode because, as Treasury nominee, he had recused himself from Fed activities, it’s difficult to imagine a scenario under which he, having headed the Fed for five years, wouldn’t have had a hand in decisions surrounding the largest federal intervention in Wall Street since the Great Depression.

None of this, of course, should come as any surprise. Geithner’s close relationship with Wall Street has been a mark on the Obama administration since the nomination 14 months ago. Of course, that relationship was also the very reason that President Obama chose Geithner to begin with. Remember what stocks did the day news of that nomination leaked?

“The reason I ask you,” said O’Donnell, “is that I think there’s some confusion about Sarah Palin’s policies.”

It wasn’t a man-on-the-street interview with a dopey tourist being asked a surprise question, of the kind John Ziegler conducted with Obama supporters to “prove” that they had no idea what Obama believed. Jackie was a political activist with a political message. And the history of the bailouts has really been mangled by conservative spin since September 2008, when, in a panic, most Republicans (in Congress) supported them. When former Massachusetts Gov. Mitt Romney gave a speech at the Value Voters Summit this year and attacked “bailing out banks,” few people in the crowd remembered that Romney had supported the bailouts.

By and large, I’ve found that Tea Party activists and conservatives do not forgive Republicans who supported the bailouts — there is a lot of anger toward former President George W. Bush, and more toward former Treasury Secretary Hank Paulson. And here is what Palin said about the bailouts in her debate with Joe Biden.

John McCain thankfully has been one representing reform. Two years ago, remember, it was John McCain who pushed so hard with the Fannie Mae and Freddie Mac reform measures. He sounded that warning bell.

People in the Senate with him, his colleagues, didn’t want to listen to him and wouldn’t go towards that reform that was needed then. I think that the alarm has been heard, though, and there will be that greater oversight, again thanks to John McCain’s bipartisan efforts that he was so instrumental in bringing folks together over this past week, even suspending his own campaign to make sure he was putting excessive politics aside and putting the country first.

In September 2008, McCain suspended his campaign to go to Washington to help negotiate a government response to the financial crisis, resulting in a $700 billion bailout bill.

And here is what Palin says in “Going Rogue” about the bailouts, on page 270.

[T]he House of Representatives rejected a Bush-backed economic bailout plan in a vote in which two-thirds of Republicans voted no. The impression this made on the electorate was not helpful to our cause. Millions of Americans were poised to go bankrupt or lose their savings, and the perception was that Republicans had failed to respond.

I don’t think you can avoid the conclusion that Palin supported the bailout package. If a Palin supporter doesn’t know this, it’s perfectly legitimate to find out why. And yet The Weekly Standard, not alone in the conservative media, takes this exchange and makes it all about a brave 17-year-old girl battling back against an “ambush” from MSNBC.

Reports of increasing mortgage defaults signal that foreclosures are likely to increase again and peak in mid-2010. With increasing unemployment and high rates of negative equity, we have a fertile breeding ground for even more foreclosures, which add to the already-high level of for-sale inventory that needs to be cleared before values begin to rise.

Last week, the Treasury Department released the latest figures surrounding its efforts to entice mortgage servicers to modify loans voluntarily, revealing that more than 230,000 mortgages are in trial modifications under that $75 billion program. The administration says it’s on pace to alter 500,000 loans by the start of November. Yet as The New York Times pointed out earlier in the week, the effort is hardly keeping pace with the rising number of foreclosure filings, which topped 336,000 in June alone, according to RealtyTrac.

On top of the pace, some servicers are using dubious modification tactics, like forcing homeowners to waive their legal rights when they agree to the changes. Also, most servicers are reducing their rates, but not the principal balances of the loans. The result is that homeowners have little chance to build equity — and therefore little incentive to fight to stay put. From the Times:

With home prices falling, a better way to avoid redefault would be to forgive principal. In apparent deference to banks that do not want the losses associated with principal reductions, Obama officials have not pressed lenders to adopt that approach.

Democratic leaders in both the House and Senate have warned that, if the voluntary modification program doesn’t pick up speed, they’ll push for the return of legislation empowering homeowners to escape foreclosure through bankruptcy — a measure killed by the Senate in May April. Of course, roughly 1 million more homes are projected to foreclose in the meantime.

But the most fascinating thing about the episode — aside from the fact that it took event organizers about an eon to get the protesters off the stage — was that these activists think that President Obama is somehow a victim of Larry Summers.

“Resign Larry,” one protester said as she was being escorted through the doors of the conference room. “The people are asking you to give Obama a fair shot and you should resign.”

Give Obama a fair shot? Who do they think appointed Summers to his post?

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“The government is going to get the money back,” said Moore. “I’m not sure how, because there are real constitutional problems with some things that are being talked about, like a punitive tax on the people who took this money. It might be taken through lawsuits.”

Moore did say that the AIG bonuses were undeserved. “How can you pay bonuses to employees of a company that lost $150 billion?” he asked. “They should have lost those bonuses based on their peformance. I don’t have problem with bonuses, and I don’t have a problem with high corporate salaries, but two groups of people have been looted here — the shareholders and the taxpayers.”

First, we are sending AIG a letter asking them to renegotiate the contracts that include these appalling bonuses. Second, if they don’t, Chairman [Max] Baucus [D-Mont.] will propose legislation to give this money back to the taxpayers by subjecting the bonuses to severe tax penalties. Third, as part of the Economic Recovery Act, we asked the Treasury Department to establish guidelines regarding executive pay and luxuries. Last week we sent Treasury a letter urging it to quickly finish these guidelines; today we reiterate that request. Fourth, we will work with President Obama and the Banking Committee to complete a Wall Street Accountability bill as soon as possible.

Meanwhile, of course, legislation to stabilize the troubled housing market — which has already lost $6 trillion since the downturn began, according to some estimates — remains stalled in the Senate. Why AIG’s $165 million in bonuses is more important than that $6 trillion has yet to be explained.

Not a typo.

When Congress and the Bush administration were butting heads last year over the size of the Democrats’ spending bills, congressional leaders decided to delay the process until someone else had the keys to the White House. After passing bills to fund the Defense, Veterans Affairs and Homeland Security departments, they kicked nine other appropriations bills to this year. Democrats will wrap those proposals into one omnibus bill, which the House will take up Wednesday. The Senate will follow shortly afterwards.

The size of the package is notable: $410 billion to fund a huge chunk of the of the government through September — including most federal health, education, energy, commerce and agriculture programs.

Remember, pre-bailouts, when that sounded like real money?